MRS AGNES GERTRUDE OSEI
(PLAINTIFF/RESPONDENT/APPELLANT/CROSS RESPONDENT)
vs.
INNOVA HOLDINGS LTD
(DEFENDANT/APPELLANT/RESPONDENT/CROSS APPELLANT)
[SUPREME COURT, ACCRA]
CIVIL APPEAL NO: J4/68/2023
DATE: 11 FEBRUARY, 2025
COUNSEL
KIZITO BEYUO ESQ. WITH IRIS AGGREY ORLEANS ESQ. FOR THE PLAINTIFF/RESPONDENT/APPELLANT
RICHMOND NUMBO SAAKA ESQ. WITH NANA BOAKYE MENSAH BONSU ESQ. FOR DEFENDANT/APPELLANT/RESPONDENT
CORAM
AMADU JSC (PRESIDING), KULENDI JSC, GAEWU JSC, DARKO ASARE JSC, ADJEI-FRIMPONG JSC
JUDGMENT
KULENDI JSC:
INTRODUCTION:
We have before us an appeal against the judgment of the Court of Appeal, Accra, dated 21 June, 2018. This judgment overturned, in part, the judgment of the High Court dated the 21 day of March, 2016.
Since both parties in this suit are cross-appellants, they shall be referred to by their original designations as Plaintiff and Defendant, respectively.
FACTS:
The present appeal arises from an action initiated by the Plaintiff through the issuance of a Writ of summons, accompanied by a Statement of Claim, against the Defendant. The suit was filed in the Registry of the High Court (Land Division), Accra, on 17 September 2012 and subsequently amended on 23 March 2015.
The Plaintiff’s claim is premised on an alleged breach by the Defendant of an agreement dated 18 September 2008 between the parties. The Defendant is alleged to have unlawfully demolished one of two properties situated on a portion of the leased land known as No. 70 Volta Street, Airport Residential Area, Accra, without the Plaintiff’s prior consent or authorisation. Following repeated but unsuccessful attempts to have the Defendant remedy the situation, the Plaintiff commenced the action in the High Court, seeking the following reliefs:
1. An order for the forfeiture of the lease was executed on 18 September 2008 between the Plaintiff and the Defendant in respect of No. 70 Volta Street, Airport Residential Area, Accra.
2. Recovery of possession of the said property.
3. Damages for breach of covenant.
4. Special damages in the sum of US$500,000 representing the cost of reconstructing a five-bedroom, one-storey building with amenities equivalent to the demolished structure.
5. Mesne profits from the date of service of the writ of summons until the date of delivery of possession
The Defendant, on the 12 February 2013, filed its defence to the present suit, denying the allegations levelled against it. This Statement of Defence was amended on the 25 March 2015.
PLAINTIFF’S CASE:
According to the Plaintiff’s pleadings, on or around 3 August 1968, she acquired her interest in the land, the subject matter of this appeal, pursuant to a lease agreement with the Government of Ghana. The Plaintiff avers that following her acquisition, she constructed a five-bedroom, one-storey building with two garages and a two-bedroom outhouse on a portion of the land. It is the Plaintiff’s case that sometime in 2005, she commenced the construction of a six-storey building on the remaining portion of the land, which building was still uncompleted at the time of the transaction with the Defendant.
It is the Plaintiff’s case that by a tenancy agreement dated 18 September 2008, she let the entire property, including both structures, to the Defendant for a term of twenty-five (25) years, commencing the 1 October, 2008, at a monthly rent of Two Thousand United States Dollars (US$2,000.00). The Plaintiff contends that, under the terms of the tenancy, the Defendant agreed to pay an advance sum of One Hundred and Sixty-Eight Thousand Dollars (US$168,000.00) being the rent for the first seven (7) years of the lease but only remitted One Hundred and Ten Thousand United States Dollars (US$110,000.00), leaving an outstanding balance of Fifty-Eight Thousand United States Dollars (US$58,000.00) which remained unpaid at the commencement of this action, despite repeated demands.
The Plaintiff further asserts that the tenancy was granted on an “as is” basis, obligating the Defendant to renovate and remodel the properties at its own expense to enhance their tenantability. However, the Plaintiff alleges that, in breach of this covenant, the Defendant unlawfully demolished the five-bedroom, one-storey building in its entirety.
According to the Plaintiff, she lived in the property, which was demolished for a period; however, she moved out two years before work commenced on the buildings. She claims that upon exiting the premises, she relocated to Kumasi and was in Kumasi when she heard news from her sister that her five-bedroom building had been razed down by the Defendant. Despite her objections and multiple demands for the Defendant to restore the demolished structure, no remedial action has been taken. She claims that for three years, she attempted contacting the Board Chairman of the Defendant company, but to no avail.
On 11 January 2012, the Plaintiff’s solicitors formally notified the Defendant of this breach, demanding rectification, but the Defendant failed to comply. Consequently, the Plaintiff initiated the present action, seeking the above enumerated reliefs.
DEFENDANT’S CASE:
The Defendant, on the other hand, asserts that the property leased to it comprised a dilapidated five-bedroom storey building with attendant garages and outhouses and an uncompleted six-bedroom structure. The Defendant maintains that by reason of the dilapidated and virtually uninhabitable condition of the five-bedroom building, the parties agreed to the inclusion of a clause in the lease requiring the Defendant to renovate and remodel the property at its own expense to a more tenantable state than what prevailed as at the time of the execution of the tenancy agreement. The Defendant contends that it fully complied with the terms of the lease by undertaking renovations on the second building, pulling down the first building and undertaking the construction of a new building in its place.
With respect to the alleged outstanding rent of US$58,000, the Defendant asserts that payment was withheld at the Plaintiff’s instruction, as she directed the Defendant to retain the funds and subsequently refused to accept payment.
Regarding the structure which was pulled down, the Defendant claims that the Plaintiff, through an intermediary, George Kofi Frimpong, expressly encouraged it to raze down the building and construct a new one in its place. According to the Defendant, this act amounted merely to a ‘remodelling’ of the building and not a demolishing of the same. Subsequently at trial, however, the Respondent conceded that their actions amounted to demolishing the property but argued that said act of demolition fell within the scope of activities permitted under the Defendant’s obligation to ‘remodel and renovate’ the premises. Accordingly, the Defendant maintains that the Plaintiff’s claims are without merit, as she expressly consented to the demolition under the lease’s “remodel” clause to make room for the construction of a new building.
The Defendant further contended that, given the commercial nature of the lease arrangement, the Plaintiff continued to reside on and benefit from the property until the Defendant was prepared to proceed with the demolition. The Defendant argued at trial that the renovations and remodelling undertaken on the property have substantially enhanced the value of the property without prejudicing the Plaintiff’s reversionary interest. The Defendant, through its Board Chairman, maintained that the 2 building, the uncompleted six (6) bedroom building, was at the 40% completion stage at the time when it executed the lease with the Plaintiff.
JUDGMENT OF THE HIGH COURT:
After considering the evidence presented by both parties and their witnesses, the trial court established that, contrary to the Defendant’s claims, it had indeed demolished the 5-bedroom building on the land. The Court determined that this demolition did not qualify as “remodelling” under the terms of the agreement or, indeed, the Rents Act, 1963 (Act 220). Consequently, the trial court concluded that the Defendant had unlawfully demolished the first building without the Plaintiff’s consent. As a result, the trial court entered judgment in favour of the Plaintiff and found that the Defendant had, by his actions, forfeited the tenancy agreement between the parties. Subsequently, the court ordered that the Defendant surrenders possession of the property within six months of the judgment.
Additionally, the High Court awarded the Plaintiff general damages of Thirty Thousand (GH¢30,000.00) for breach of the covenants in the tenancy agreement, special damages of Five Hundred Thousand United States Dollars (US$500,000.00) as compensation for the cost of replacing the demolished First Building, mesne profits with applicable interest, and costs of Fifty Thousand Ghana Cedis (GH¢50,000.00).
JUDGMENT OF THE COURT OF APPEAL:
Following an appeal by the Defendant, the Court of Appeal, by a majority decision of 2-1, dated 21 June 2018, upheld the Appellant’s appeal in part. The Court determined that the tenancy agreement, which incorporated covenants for renovation and remodelling with the purpose of subletting, went beyond a simple tenancy agreement and took on the characteristics of a tenancy/construction/investment contract.
In addition, the Court upheld the trial judge’s finding that the property was not dilapidated and rejected the Defendants’ claim that one of the buildings was to be demolished because it was in a state of disrepair. Instead, the Court concluded that the property was in a tenantable state, and any renovation or remodelling was aimed at making it even more tenantable. The Court relied on the Plaintiff’s testimony regarding the maintenance and periodic renovations undertaken during her occupation of the property. It held that since the Defendant was the one asserting that the building was dilapidated, the burden of proof lay on them, a duty which, in the estimation of the Court of Appeal, it had failed to discharge. Furthermore, the Court found that the Defendant’s witness, George Kofi Frimpong (DW1), was inconsistent in his testimony regarding whether the building was merely old or actually dilapidated.
In resolving whether or not the duty to ‘remodel and renovate’ under the tenancy agreement encapsulated an option to demolish the structure, the Court below referred to dictionary definitions of “renovate” and “remodel,” emphasizing that while “remodel” allowed for significant modifications, it did not necessarily imply demolition. The Court also cited Section 36 of the Rent Act, which explicitly states that “remodelling” does not include demolition and reconstruction.
The point of divergence between the High Court and Court of Appeal came under the discussion of the suitable reliefs for the Plaintiff by reason of the breaches of the Defendant. The Court of Appeal found that the trial court erred in awarding $500,000 in special damages when the Bill of Quantities tendered by the Plaintiff had valued the reconstruction of the property at One Million Four Hundred and Eighty-Seven Thousand Seven Hundred and Sixty-seven Ghana Cedis Seventy-Three pesewas (GHS 1,487,767.73). Consequently, the Court of Appeal revised the award accordingly while reducing the cost awarded from Fifty Thousand Ghana Cedis (GHS 50,000) to Thirty Thousand Ghana Cedis (GHS 30,000.00).
Additionally, the Court of Appeal determined that the trial court had incorrectly treated the lease purely as a tenancy agreement when it actually contained elements of a construction contract. As a result of the nuanced nature of this agreement, the Court of Appeal took the view that the principles of forfeiture ought not have been strictly applicable, and the Defendant’s tenancy should not have been forfeited. The Court held that since the Defendant had invested substantial resources in the second building, justice would be better served by awarding damages rather than forfeiting the lease. Consequently, it set aside the orders for forfeiture and mesne profits.
In her dissent, Torkornoo JA (as she then was) argued that the term “remodel” should include reconstruction, as defined in Black’s Law Dictionary and the Cambridge English Dictionary. She found that the Defendant had sufficiently proven that the parties had agreed, both before and after signing the tenancy agreement, that demolition was part of the remodelling process.
Furthermore, she reasoned that the parole evidence rule under Section 177 of the Evidence Act did not bar extrinsic evidence that clarified or expanded, rather than contradicted, the original contract. The learned judge concluded that the Plaintiff’s acceptance of rent despite the Defendant’s breaches amounted to a waiver, and rather than forfeiting the lease, the Court should have ordered the Defendant to rebuild the demolished structure in its original shape while permitting modifications for commercial use.
GROUNDS OF APPEAL:
Per a notice of Appeal filed on 18 September 2018, the Plaintiff lodged an appeal against the decision of the Court of Appeal, setting aside the order of the High Court forfeiting the lease between the parties.
The Plaintiff’s Appeal was brought on the following grounds:
i. Having affirmed the finding by the High Court that the Defendant was in breach of the lease dated 12 September 2008 by demolishing the Plaintiff’s building, the learned judges of the Court of Appeal were wrong in law when they reversed the decision of the High Court forfeiting the lease made between the Plaintiff and the Defendant.
ii. The decision of the learned judges of the Court of Appeal to reverse the decision of the High Court forfeiting the lease made between the Plaintiff and the Defendant is not supportable by the evidence on record and all the circumstances of the case.
Similarly, the Defendant, on the 17 of January 2019, filed their notice of appeal pursuant to leave of the Court of Appeal dated 16 January 2019.
The appeal was brought specifically against the portion of the judgment that held that the Defendant was entitled to the award of special damages in the sum of GHS 1,487,767.73 and the part of the judgment which affirmed the award of GHS 30,000 Ghana cedis as general damages.
This cross-appeal was brought on the following grounds:
i. The Court erred in awarding special damages in the sum of GHS 1,487,767.73 in favour of the Plaintiff when the Plaintiff, from the record, had failed to prove same.
ii. The general damages awarded to the Plaintiff, in regard to all the circumstances, are excessive and unjustifiable.
ANALYSIS:
29. The case of Dowuona VI vrs. Barclays Bank Ghana Ltd [2023] GHASC 88 (19 July 2023) reiterates the tone for the duty incumbent on us when exercising our jurisdiction as a second appellate Court. In the said case, the venerable Ackah-Yensu JSC. said as follows:
“The well-established rule of law is that an appeal is by way of rehearing, and an appellate court is therefore entitled to look at the entire evidence on record and come to conclusions on both the facts and the law. This position has been stated in a long line of decisions of this Court such as Tuakwa v Bosom [2001-2002] SCGLR 61; Oppong v Anarfi [2011] 1 SCGLR 556; Dexter Johnson v The Republic, Opare Yeboah & Others v Barclays Bank Ghana Ltd. [2011] 1 SCGLR 330; and, Agyewaa v P & T Corporation [2007-2008] SCGLR 985.”
30. Consistent with this rehearing jurisdiction, we have taken the pains to evaluate the entirety of the record before us in juxtaposition with the judgement of the Court of Appeal. We shall commence our discussions with an evaluation of the factual findings of the Court of Appeal.
31. Firstly, the Court of Appeal found that despite the designation agreement as a Tenancy Agreement, it transcended the nature or scope of a mere tenancy agreement and took on the characteristics of a tenancy/construction/investment contract by reason of the obligation on the part of the Defendant to ‘remodel and renovate’ the buildings.
32. Further, the Court of Appeal suggested that there was equally an obligation on the part of the Defendant to pay the Plaintiff the sum of Fifty Thousand United States Dollars ($50,000.00) for the work that the Plaintiff had conducted on the uncompleted six-bedroom building. Consequently, the Court of Appeal concluded that the agreement was not a formal tenancy agreement and, therefore, ought not to have been treated strictly with principles relating to a tenancy agreement.
33. With due deference to the Court below, we are of the considered view that the learned justices may have been rather overly pedantic in the import to be placed on the requirement of the Defendant to renovate and remodel the premises. While we concede that the obligation to remodel the premises was uncommon in most tenancy agreements, this addition did not in any way change the fundamental flavour or character of the agreement from a tenancy arrangement. In fact, the Defendant, through its Board Chairman, admitted at trial that the Plaintiff had heavily reduced the rental rate by reason of his added obligation to remodel and renovate the premises. Again, there was no admission on the part of the Defendant of any obligation to pay the Plaintiff the sum of US$50,000.00 for the expenses she had incurred in respect of the six (6) bedroom structure. On the contrary, when the Defendant was confronted with this allegation, he outrightly denied it, stating that ‘the agreement spoke for itself’.
34. We find that these nuances notwithstanding, the agreement was still fundamentally a tenancy agreement and, therefore, was amenable to the principles and rules that governed the regime of tenancy agreements. The document which formed the foundation of the instant dispute is captioned and described plainly as a ‘Tenancy Agreement’ between Mrs. Agnes Gertrude Osei of the one part and Innova Holdings of the other part. In this deed, the parties are clearly designated as Landlady and tenant, respectively, referable to the designations adopted by the parties in a tenancy agreement. Additionally, the agreement included clear terms, stipulating the monthly rent to be charged by the Land Lady and a corresponding obligation on her part to yield the rented premises for the benefit of the tenant.
35. The terms of the tenancy, which included an auxiliary and/or peripheral obligation of the tenant to renovate and remodel the premises, could not therefore, derogate from the fundamental essence of the contract as a tenancy agreement into an ‘investment or construction agreement’ devoid or removed from the legal rules, laws and principles regulating a tenancy agreement.
36. In the circumstances, we hold that that instant agreement was, in fact, a tenancy agreement and was, therefore, regulated by the terms of the Rent Act and related laws.
37. On that score, section 36 of the Rent Act (Act 220) clearly prescribed that:
“remodelling” in respect to premises does not include the demolition of the premises and the construction on the land on which the premises were situated of new premises, and cognate expressions shall be construed accordingly.
38. We wholly agree with the conclusions of the Court of Appeal with regard to the meaning and scope of the term ‘remodelling and renovation’ and the fact that this obligation did not and could not have encapsulated an option to demolish the five-bedroom building. From the outset, it is clear that within the context of the Rents Act, 1962 (Act 220), which regulates tenancy agreements like that implicated in the instant case, the use of the term remodelling did not contemplate an opening for the Defendant to demolish the building at his discretion and reconstruct other apartments.
39. Furthermore, in one breath, the Defendant argued that its action amounted only to a remodelling of the premises and not a demolition of the same; however, in another breath, it conceded that it had, in fact, demolished the building but argued that he had been spurred on the by the Plaintiff and her intermediary, George Frimpong, to demolish the property. This paltering position fundamentally undermined the strength of the Defendant’s case.
40. It is clear from the evidence of both the Defendant and his witness, Mr. George Frimpong (DW1), that at the time of executing the tenancy agreement, the parties did not contemplate the duty to remodel and renovate as being inclusive of an option to demolish the property. During the examination-in-chief of Mr. George Frimpong, who the Defendant presented as his first witness, he gave evidence which suggested that the duty to ‘remodel’ related more with respect to the second six-bedroom building, which was incomplete as at the time of the execution of the agreement, not the five-bedroom building which was razed down. He recounted the sequence of the work they carried out on the Plaintiff’s premises as follows:
“The outer house was not a complete building in terms of structural elements. There were no fittings on the ground floor and the stairs leading to the first floor was about 85%; the main floor was about 95% complete that was the state, so we did the remodelling for that particular thing, we changed the layout and everything and worked on the main first floor whiles we were doing all these works she was in the main house.” (emphasis supplied)
41. Similarly, contrary to the Defendant’s position, his witness, in his examination-in-chief, devoid of the pressure and confrontation of cross-examination, admitted that the issue of demolition was raised for the very first time after the execution of the contract when, according to him, the Plaintiff sought his intervention to suggest to the Defendant that the five-bedroom building be razed down and another constructed in its place. This sequence, as delivered by the Defendant’s own witness, was diametrically opposed to the Defendant’s case that the duty to demolish was captured within the covenant to ‘remodel and renovate’.
42. The exchange between the Defendant’s witness and the Plaintiff’s lawyer, under cross-examination on 14 July 2015, best epitomises the clear deviation from the case of the Defendant. For the purpose of emphasis, portions of this exchange are set out below:
“ Q: Read paragraph C
A: “that the tenant is hereby given the consent and approval to renovate and remodel the two properties to a more tenantable state than what prevails presently and could sublet the said properties which concern is hereby given.”
Q: The Defendant was to renovate and remodel?
A: Yes, my Lord.
Q: The demolition of a structure is the breaking down of the structure.
A: Yes, my Lord.
Q: To renovate and remodel is to do some works on the structure to a person’s taste.
A: Yes, my Lord.
Q: So, the demolition of a structure is not the same as renovation and remodelling.
A: That is true, my Lord.
Q: The agreement between the Plaintiff and the Defendant gave the consent of the Plaintiff to the Defendant to renovate and remodel.
A: Yes, my Lord.
Q: The agreement did not give the consent of the Plaintiff to the Defendant to demolish the structure.
A: Yes, it has not been given.
…
Q: You told this Court that the Plaintiff, outside of this agreement, told the Defendant to demolish her structure?
A: My Lord, that is true
…
Q: Yesterday, again, you said to this Court that the Plaintiff told you outside Exhibit “A” that the Defendant should demolish her structure.
A: Yes, I did.”
43. It is settled legal principle, in the evaluation of evidence that whenever the testimony of a party on a crucial issue was in conflict with the testimony of his own witness on that issue (as in the case of the Defendant in the instant case) it was not open to a trial court to gloss over such a conflict and make a specific finding on that issue in favour of the party whose case contained the conflicting evidence on the issue. See the cases of ATADI v. LEADZEKPO [1981] GLR 218, CA; ALHAJI ISSAH BUKAR, GBETOR NAA (DECEASED) AND NAA MUMUNI SAAKA, SING NAA (DEC’D), KULK-PONG, SING NAA. V. MAHAMA BAYONG OF SUYIRI – WA AND 3 OTHERS (NO. J2/1/2013 dated 21st May, 2013); GORDON TANNO KWACHIE V. S. K. AMADZO AND AKUA BRONYA (NO: H1/20/2015 dated 10th February, 2015.
44. The Defendant, on the other hand, gave evidence through its Board Chairman in the person of Mr. Alex Asiedu; in his evidence, he admitted that the conversation on demolishing was broached after the conclusion of the agreement and after a re-examination of the building. In his examination-in-chief on the 30 July 2015, he said as follows:
“In the course of one of our renovation works for GT Bank at the Labone branch. We came in contact with one Mr. George Frimpong – DW1 who had that time was working with Mrs. Baaba Bandah. Upon seeing the work that we had done at the Labone branch, he approached us the Defendant that he has an aunt by the name of Mrs. Agnes Osei – the Plaintiff who had property at Number 17 Volta Road Airport residential area in Accra and that she was looking for someone to take over the property to do a complete remodelling and renovation. I went to the site to take a look at the building. There were two structures on the land; one was about 40% complete and the 2nd one was in a very dilapidated condition. Pursuant to this, we had a discussion with her after going back and forth, we finally agreed to enter into an agreement which intended to lease the two properties on the piece of land to the Defendant for a period of 25 years certain. Upon re-examination of the building, it was made very clear to her that we will go ahead at our own expense to complete the one that was 40% completed. Additionally, we would move ahead to totally remodel and renovate the 2nd one, which was in a very bad state; structurally, the building was weak. She agreed that the building could be demolished and requested that we put three (3) three-bedroom units on that piece of land, to which I went back to her and said it will be too.”
45. Until this rather startling admission in the examination in chief of the Defendant, it had strenuously resisted any attempt to brand its clear action as a demolition of the property. Indeed, it pleaded specifically in its Statement of Defence that it had not demolished the property but had only remodelled it, pursuant to its obligations under the tenancy agreement. In the witness box, however, the Defendant had effectively changed its tune, now testifying that the decision to demolish the property was reached after the tenancy agreement had been brokered and agreed.
46. Upon abandoning the ill-fated attempt to suggest that the agreement in its original sense admitted of the option of demolition under the duty to renovate, the Defendant then sought to urge the position that the Plaintiff had, in fact, convinced it, outside the scope of the agreement, to demolish the property and construct another in its place. On this score, the Defendant was further unable to discharge the burden of proving this allegation. In any case, such extraneous oral evidence contradicted the documented agreement of the parties, and consequently, the documentary evidence of the parties would take precedence.
47. The parole evidence rule was particularly essential in this regard as it must operate to debar the Defendant from seeking to adduce extrinsic evidence to add to, vary or contradict the terms of the tenancy agreement, which for all intents and purposes constituted the sole repository of the terms of the contract. Specific reference is made in this regard to section 177 of the Evidence Act, which provides as follows:
“Except as otherwise provided by the rules of equity, terms set forth in a writing intended by the party or parties to the writing as a final expression of intention or agreement with respect to those terms may not be contradicted by evidence of a prior declaration of intention, of a prior agreement or a contemporaneous oral agreement or declaration of intention, but may be explained or supplemented,
(a) by evidence of consistent additional terms unless the Court finds the writing to have also been intended as a complete and exclusive statement of the terms of the intention or agreement, but a will and a registered writing conveying immovable property shall be deemed to be a complete and exclusive statement of the terms of the intention of agreement; and
(b) by a course of dealing or usage of trade or by course of performance.”
48. We find this attempt by the Defendant to argue the existence of a subsequent extrinsic agreement by the parties, which flew in the face of the express terms of the tenancy agreement, to be an afterthought, which is uncorroborated and unsubstantiated by any evidence on record. We endorse the finding of the Court of Appeal that the Defendant unilaterally and arbitrarily demolished the five-bedroom house of the Plaintiff without recourse to her.
49. As we have observed earlier, the point of departure between the judgment of the Court of Appeal and the Trial High Court pertained to the nature and scope of the reliefs that the Plaintiff was entitled to by reason of the egregious actions of the Defendant. The trial court took the view that the actions of the Defendant constituted fundamental breaches of key terms of the agreement and thereby constituted valid grounds for the forfeiture of the tenancy.
50. On its part, the Court of Appeal, motivated by its predicate position that the fundamental character of the agreement had been changed from a tenancy agreement to a tenancy/construction/investment agreement, found that the strict principles covering forfeiture of tenancy agreements ought not to have been applied, given the largely commercial character and flavour of the agreement.
51. As we have previously indicated, we are unpersuaded by the Court of Appeal’s view on the metamorphosis of the agreement, primarily on account of the nuanced obligation to renovate and remodel.
52. On the issue of forfeiture, the Eleventh Edition of the Black’s Law Dictionary, defines the phenomenon as:
“The loss of a right, privilege, or property because of a crime, breach of obligation, or neglect of duty. The title is instantaneously transferred to another, such as the government, a corporation, or a private person”.
53. Section 17 of the Rents Act, 1963 (Act 220), which is instructive on the topic of forfeiture, provides that:
(1) Subject to subsection (2) of section 25 and to section 28, an order against a tenant for the recovery of the possession of, or for the ejectment from, any premises shall not be made or given by the Rent Magistrate or any other judge of a court of competent jurisdiction in accordance with any other enactment except (b) where an obligation of the tenancy, other than that specified in paragraph (a) (rent), so far as that obligation is consistent with this Act, has been broken or not performed;
54. Similarly, section 29 of the Conveyancing Decree sheds useful light on the topic:
(1) A right of re-entry or forfeiture under any provision in a lease for a breach of any covenant, condition or agreement in the lease shall not be enforceable, by action or otherwise, until—
(a) the lessor serves on the lessee a notice:
(i) specifying the particular breach complained of;
(ii) if the breach is capable of remedy, requiring the lessee to remedy the breach; and
(iii) (except where the breach consists of a non-payment of rent) requiring the lessee to make reasonable compensation in money for the breach; and
(b) the lessee has knowledge of the fact that such notice has been served;
and the lessee fails, within a reasonable time thereafter, to remedy the breach, if it is capable of remedy and (except where the breach consists of a non-payment of rent) to make reasonable compensation in money, to the satisfaction of the lessor, for the breach.
55. In the recent decision of this Court in the case of Royal Investment Company Vrs Quarcoopome and Another (66 of 2021) [2021] GHASC 104 (1 December 2021), the erudite Amegatcher JSC. opined as follows:
“On the other hand, where there was a breach of a covenant there could not be forfeiture unless there was an express provision for re-entry in the lease based on the breach of the said covenant. This position was advanced by Ollennu J (as he then was) in the case of BASSIL v SAID RAAD & SONS (1958) 3 WALR 231 as follows: “Now at common law, there can be no forfeiture for breach of covenant under a lease unless there is an express provision in the lease for re-entry”.
56. Instructively, the tenancy agreement provided expressly for re-entry and forfeiture of the said tenancy in the event of the non-payment of rent and/or the breach of a covenant within the tenancy. The said provision was set out as follows:
“ If the rent hereby reserved or any part thereof shall be in arrears and unpaid for one calendar month after the same has become due and payable, the Landlord shall give the Tenant (14) fourteen days’ notice to pay the said rent or in the event of a breach of any of the covenants of this agreement on the part of the Tenant herein contained, the Landlord may after giving three months’ notice of her intention so to do, re-enter the premises and thereupon this demise shall absolutely determine but without prejudice to the rights and remedies of either party against the other for any antecedent breach of any of the covenants herein contained.”
57. It is significant to note that on 11 January 2012, Counsel for the Plaintiff wrote to the Defendant company formally notifying the company of their unlawful and unilateral demolition of the five-bedroom building on the land. Further, the letter demanded that the Defendant immediately restore the building, failing which the Plaintiff would take necessary action to forfeit the tenancy agreement.
58. We find that the Defendant’s demolition of the 2 Property, which was undertaken without the consent of the Plaintiff, constituted a fundamental derogation from the expressed agreement of the parties. Indeed, this singular act on the part of the Defendant equally breached the covenant incumbent on the Defendant to remodel or renovate the premises. Additionally, the demolition of the premises contravened the covenant that the Defendant was required to keep the interior of the premises in good and substantial repair and condition. Again, the Defendant, in the demolition of the property, breached the covenant not to cause damage to the property.
59. We find that the Defendant’s infractions against the tenancy agreement indeed entitle the Plaintiff to a forfeiture of the Defendant’s tenancy. The Court of Appeal had, in an attempt to temper justice with mercy, sought to leverage the considerable financial investment the Defendant had expended on the property to ground a suo moto application for relief against forfeiture under section 30 of the Conveyancing Decree, 1973 (NRCD 175).
60. With respect to the learned justices of the Court below however, we are of the considered view that the Defendant’s investment on the Plaintiff’s land cannot serve as a bar to the forfeiture of the tenancy. At the time the Defendant chose to unlawfully demolish the Plaintiff’s structures, it was fully aware of the substantial investment it had made on the land and the potential consequences of its actions. Despite this knowledge, the Defendant brazenly proceeded to raze down the Plaintiff’s building, knowingly exposing himself to the risk of forfeiture.
61. Having wilfully engaged in conduct that directly violated the terms of the tenancy, the Defendant cannot now seek refuge under its own investment to shield itself from the consequences of its breach. To allow such a defence would be to permit a party to benefit from his own wrongful actions, undermining the fundamental principles of contractual enforcement and accountability. In consequence of the forgoing, we hereby restore order of the High Court forfeiting the Defendant’s tenancy agreement with the Plaintiff.
62. The Defendant has taken issue with the Court of Appeal’s decision to award special damages to the tune of One Million Four Hundred and Eighty-Seven Thousand Seven Hundred and Sixty-Seven Ghana Cedis Seventy-Three pesewas (GHS 1,487,767.73). It argues that special damages, in its strict sense must be awarded in respect of the properly quantifiable and proven loss incurred by the Plaintiff and none other. According to the Defendant, the bill of quantities tendered by the Plaintiff at trial, was not a valuation of the property which had been demolished, but the cost of putting up the structure that had been demolished.
63. Halsbury’s Laws of England (3rd ed.), Vol. 11, p. 218, defines special damages as compensation for special damage which is not presumed by law to be the natural and probable or direct consequence of the act or omission complained of but which does in fact result in the circumstances of the particular case and of the injured party’s claim to be compensated.
64. Similarly, in the landmark case of Stroms Bruks Aktie Bolag v. Hutchison [1905] A.C. 515 at 525-526, H.L. (S.C.) Lord Macnaghten said:
“… Special damages’ … are such as the law will not infer from the nature of the act. They do not follow in ordinary course. They are exceptional in their character, and, therefore, they must be claimed specially and proved strictly.”
65. In our view, the essence of a claim for special damages lies in the fundamental principle that the party seeking such damages must establish, with credible evidence, the fact of the occurrence of the loss and the degree of damage experienced as a result of the loss. It would be both absurd and a grave miscarriage of justice for us to endorse the argument of the Defendant that, despite the Plaintiff having incontrovertibly proven the demolition of her building, the appropriate measure of special damages should be limited to the historical cost of constructing the property rather than the current cost of rebuilding it.
66. Special damages are intended to place the injured party in the position they would have been in but for the wrongful act, and in this case, that necessarily entails awarding the Plaintiff the amount required to reconstruct the demolished structure, not merely the outdated sum originally expended on its development. In the circumstances we shall uphold the Court of Appeals award of special damages to the tune of One Million Four Hundred and Eighty-Seven Thousand Seven Hundred and Sixty-Seven Ghana Cedis Seventy-Three pesewas (GHS 1,487,767.73), all other orders by the Court of Appeal are equally upheld.
67. In consequence of our foregoing reasoning and by a unanimous decision of the Court, the Appeal succeeds in part on the following terms:
1. We restore the order of the High Court dated the 21 day of March, 2016 declaring the tenancy between the parties forfeited.
2. The Defendant is ordered to deliver vacant possession of the subject matter property to the Plaintiff within 30 days from today.
3. We affirm the order of the Court of Appeal in the award of special damages of the GHS 1,487,767.73 in favour of the Plaintiff together with simple interest from the date of judgment of the Court of Appeal that is 21 June, 2018.
4. We further affirm the award of the general damages by the Court of Appeal assessed in the form of GHS 30,000.00.
5. We award costs in the sum of GHS 50,000.00 in favour of the Plaintiff against the Defendant.
(SGD.) E. YONNY KULENDI
(JUSTICE OF THE SUPREME COURT)
(SGD.) I O. TANKO AMADU
(JUSTICE OF THE SUPREME COURT)
(SGD.) E. Y. GAEWU
(JUSTICE OF THE SUPREME COURT)
(SGD.) Y. DARKO ASARE
(JUSTICE OF THE SUPREME COURT)
CONCURRING OPINION
ADJEI-FRIMPONG, JSC:
My Lords I agree with the reasoning and conclusions of my noble and respected brother Kulendi, JSC in the lead judgment. With respect to the learned Justices of the Court of Appeal, the grounds they advanced to grant relief against forfeiture in favour of the Defendant were not well founded in law. That is to say, the circumstances of the case which they so readily referred to could not justify the grant of relief. The reasons for this position have been sufficiently articulated in the speech of my brother. I decline to rehearse them in this discourse.
I however desire to make a brief observation on the law regarding application for relief against forfeiture under Section 30 of the now repealed Conveyancing Act, 1973 (NRCD 175). I am of the view that the approach of the learned justices in granting relief when no application was made for it should not be left without a comment. I am concerned that even though the entire NRCD 175 which was the law applicable at the time has been repealed by the Land Act, 2020 (Act 1036), the provisions in Section 30 of the repealed law have been re-enacted under Section 58 of the Land Act, 2020. The potential re-occurrence of the controversy in the future should move this court to clarify the law in this area.
In their judgment, the learned Justices of the Court took the position that the Court could grant relief against forfeiture under Section 30 of the NRCD 175 (and impliedly Section 58 of Act 1036) without any application given the circumstances of the case and on the basis that the Court had an inherent equitable jurisdiction to make the grant. This is how I understood them as saying when they held:
“In the discharge of its duties, the High Court has jurisdiction at both law and equity. When a cause of action for forfeiture accrues, the court has an inherent jurisdiction to grant the equitable relief from forfeiture, see: Mensah v. Grant (1955)14 WACA 726. Although S.29 of the Conveyancing Act, gives a right for forfeiture for a breach of covenant in a lease, S.30 provides for relief from forfeiture upon an application by the tenant where in the circumstances, the court finds it just to do so. In the present instance, although there was no application for such by the appellant, it seems to me, that by reason of the peculiar circumstances of this case, being that this was more than a simple tenancy under which considerable sum of money was expended by the appellant to do construction of Building No.2 coupled with the damages both special and general, that have been awarded against the appellant, the appellant ought to be granted such relief from forfeiture. Thus, the order of forfeiture made by the learned trial judge cannot be made to stand and is hereby set aside.” [478-479 ROA]
Before us, Learned Counsel for the Plaintiff argues (at least in part), that in the absence of an application in terms of Section 30, the Court of Appeal could not exercise an inherent equitable jurisdiction to grant relief against forfeiture. He contends that the Defendant not applying for relief, it was erroneous for the Court of Appeal to suo motu grant relief.
Counsel refers to the provisions in Section 30(1) and (2) of the Conveyancing Act on “Relief against re-entry and forfeiture” which regulate the grant of relief and how to apply for it. The application may either be made in the lessor’s action or in any action brought for that purpose by the party applying. He contends that as neither of the two methods prescribed by the provisions, was present in this case, the Court of Appeal erred in granting relief. He relies on the principle that where a statute had provided a procedure for obtaining a remedy, that procedure applies. ASCHKAR V KARAM cited.
Further, Counsel points out that the case of MENSAH VRS GRANT [1955]14 WACA 726 which the Court of Appeal relied upon to grant relief was decided on the authority of the English case of BARROW VRS ISAAC & SONS [1891]1 QB 417. That decision was rooted in the exercise of equitable jurisdiction to grant relief against forfeiture on grounds of limited cases of fraud, mistake, accident or surprise. The erstwhile equitable jurisdiction has now been replaced by statutory jurisdiction, in our case by the provisions in Section 30(1) and (2) of the Conveyancing Act. This therefore makes the decision in MENSAH V GRANT less applicable. Therefore, the grant of relief by the exercise of equitable jurisdiction especially when it was not applied for was erroneous. But even if the case still bears any authority, the grant could have been on the basis of fraud, mistake, accident or surprise none of which ground was present in this case.
Now, the repealed Section 30 of NRCD 175 provided as follows:
“30. (1) Where a lessor is proceeding by an action or otherwise to enforce a right of re-entry or forfeiture under any provision in a lease, or for non-payment of rent, the lessee of the property and also a sub-lessee of the property comprised in the lease or any part thereof may, either in the lessor’s action (if any) or in any action brought by such person for that purpose, apply to the court for relief.
(2) Subject to sub-section (1) of section 29, where the lessee applies to the court for relief, the court may grant or refuse relief as it thinks fit having regard to the proceedings and conduct of the parties and to all the other circumstances; and relief when granted may be upon such terms, if any as to costs, expenses, damages, compensation, penalty or otherwise, including the granting of an injunction to restrain any similar breach in the future, as the court in the circumstances of each case thinks fit.
(3) Where a sub-lessee applies to the court for relief, the court may make order vesting, for the whole term of the lease or any less term, the property comprised in the lease or any part thereof in that sub-lessee upon such conditions as to execution of any deed or other document, payment of rent, costs, expenses, damages, compensation, giving security or otherwise as the court in the circumstances of each case may think fit; but in no case shall any such sub-lessee be entitled to require a lease to be granted to him for any longer term than he had under the original sub-lease.”
These provisions have been re-enacted by Section 58 of the Land Act (Act 1036). The law-maker deployed the same words in the re-enactment. For reason of economy, I shall not set out the provisions of the new law.
The provisions under Section 30 were not any different from what pertains in the English law which is captured in the following commentary from Halsbury’s laws of England:
“Where a lessor is proceeding, by an action or otherwise, to enforce the right of re-entry or forfeiture, the lessee, may, in the lessor’s action, if any, or in any action brought by himself, apply to the court for relief. The right to apply for relief is available in the High Court or a county court. Where a landlord claims possession in the High Court and seeks final judgment, the tenant’s right to relief is a true equitable defence and counterclaim for such relief or which unconditional leave to defence should be given… If the landlord is proceeding by action, the tenant may apply in the landlord’s action; otherwise, the tenant may himself bring an action and apply for relief but relief cannot be granted to joint tenants unless both apply for it.” Vol. 27(1), 4 edition, para, 516, p.485.
Pertinent, it is, to note that the jurisdiction under Section 30 was not an equitable one. It was statutory although of equitable origin. The requirement to apply might have been procedural in character. But it was a procedure brought upon by a statute. And therefore, even if the Court retained its inherent equitable jurisdiction to grant relief, a tenant must apply for it. The law has not prescribed the form an application should take. It however indicated the path to use. In the words of the learned A.K.P Kludze in his invaluable treatise:
“There are two ways in which the tenant may apply for relief against forfeiture under Section 30 of the Decree. If the Landlord commences proceedings in court for an order of ejectment or forfeiture against the tenant, the tenant may counterclaim for relief against forfeiture. If the Landlord does not institute legal proceedings but seeks peaceful re-entry for forfeiture, or if the tenant is apprehensive that the landlord may commence legal proceedings, the tenant may institute action as plaintiff claiming relief against forfeiture.” [Ghana Law of Landlord and Tenant, 2017 edition, page 261]
In the few cases known on the subject there was some form of application by the tenant to seek relief even if not in a formal counterclaim. One such case which ended up in this Court is BOSTON & ANOR VRS KHEMLAND BROTHERS & ORS [1964] GLR 277. The Court in that case did not insist on a formal counterclaim, nonetheless there was an application for relief. Apaloo JSC (as he then was) delivering the decision of the Court on the issue, opined:
“I do not doubt that there might be cases in which it would be wrong for a court to grant reliefs which are not sought by way of counterclaim, but in my judgment, this is not one of those cases. The only substantial issue which was debated before the trial court was whether or not this was a fit case for the court in the exercise of its equitable jurisdiction to grant relief against forfeiture. The co-defendants pleaded and took the position that they were entitled to such relief. This the plaintiffs controverted and, in the result, were unsuccessful. Counsel for the plaintiffs has not sought to suggest that the omission of a formal counterclaim worked any injustice on the appellants and he expressly disclaimed any suggestion that he was taken by surprise at the grant of this relief. Had the learned trial judge declined to grant relief on the only ground that this was not sought by a formal counterclaim, he would have erred by determining this case on the form and shutting his eyes to the substance of the matter. I do not think it is necessary for me to repeat the trite expression that equity looks to the substance rather than the form. In my judgment, the learned trial judge was entitled to grant relief against forfeiture when in substance there was a counterclaim although not so formally asserted.”
I am mindful that the KHEMLAND case was decided long before the NRCD 175 was enacted. If not, the Court might have spoken more decisively given the clear statutory intervention and the language of Section 30. In any event, nothing in the decision suggests that the need for an application was excused.
Elsewhere, there are many decisions which were based on the inherent equitable jurisdiction of the Court nonetheless, relief against forfeiture was granted on a form of application. The Privy Council in the case of LAM KEE YING SDN BHD VRS LAM SHES TONG & ANOR [1974]3 ALL ER 137 was dealing with a forfeiture issue under Section 237 of the Malaysian National Land Code the provisions of which being in pari materia with Section 30 were as follows:
“(1) Any lessee, sub-lessee or tenant against whom any person or body is proceeding to enforce a forfeiture may apply to the Court for relief against forfeiture and the Court—(a) may grant or refuse relief as it thinks fit, having regard to all the circumstances of the case (including, if the case is one to which the provisions of section 235 applied, the proceedings and conduct of the parties under that section); and (b) if it grants relief, may do so on such terms as it thinks fit.
(2) The provisions of sub-section (1) shall have effect notwithstanding, any provision to the contrary in the lease, sub-lease or tenancy in question.”
The Privy Council observed as follows:
“On behalf of the appellant, it was objected that the Federal Court has no jurisdiction to grant relief because no application had been made by the respondents for relief as required by the section. It is perfectly true that the respondents’ pleadings did not contain any application for relief and that no application was made to the judge at the trial. However, an application for relief was made to the Federal Court and although Counsel did not expressly refer to s 237 of the National Land Code the judges understood the application as referring to relief under that section. The power given by the section is to grant relief on an application made by (inter alios) a lessee against whom any person is proceeding to enforce a forfeiture. The application made in the present case, although informal, answered that description.”
In ABBEY NATIONAL BS VRS MAY BEECH LTD [1984]3 ALL ER 262 the mortgagee of a lease which had been forfeited by the lessor applied for relief against forfeiture under Section 146(4) of the Law of the Property Act, 1925 which had the following provision:
“(4) Where a lessor is proceeding by action or otherwise to enforce a right of re-entry or forfeiture under any covenant, proviso or stipulation in a lease, or for non-payment of rent, the court may, on application by any person claiming as under-lessee any estate or interest in the property comprised in the lease or any part thereof, either in the lessor’s action (if any) or in any action brought by such person for that purpose, make an order vesting, for the whole term of the lease or any less term, the property comprised in the lease or any part thereof in any person entitled as under-lessee to any estate or interest in such property upon such conditions as to execution of any deed or other document, payment of rent, costs, expenses, damages, compensation, giving security, or otherwise, as the court in the circumstances of each case may think fit, but in no case shall any such under-lessee be entitled to require a lease to be granted to him for any longer term than he had under the original sub-lease.”
The Court in exercise of its inherent equitable jurisdiction granted relief to the mortgagee but upon an application. The holding appearing in the headnote states:
“On its true construction, s 146(4) of the 1925 Act did not displace the court’s inherent equitable jurisdiction to grant relief to a person claiming as under-lessee where the lessee failed to pay a sum (other than rent) due under the lease. It followed that although it was too late for the court to grant the mortgagee relief under s. 146(4), the court could, and would grant relief in the exercise of its equitable jurisdiction.” See also GRAY VSR BONSALL [1904]1 KB 601.
The MENSAH VRS GRANT case on which the learned Justices of the court below relied to grant relief suo motu, with respect to them, never excused application because the court was exercising an inherent equitable jurisdiction. Indeed, it was a case which the Plaintiff actually commenced, to purposely, seek relief against forfeiture. It was therefore erroneous on the part of the learned justices to grant relief under Section 30 of NRCD 175 without an application on the authority of the case.
The need to satisfy the statutory requirement of an application under the section is to ensure that an applicant demonstrates sufficient factual and legal grounds to enable the Court consider whether or not relief ought to be granted and if so, on what terms. I shall reiterate that the jurisdiction is now statutory although equitable in origin and the statute has prescribed the mode of its invocation which I think must be followed. In my judgment, where the legislature steps in with a particular legislation on a particular subject, effect must be given to that legislation.
(SGD.)
R. ADJEI-FRIMPONG
(JUSTICE OF THE SUPREME COURT)
